Meta in Agreement With Tencent To Sell Its Virtual Reality Headset in China

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Meta Platforms (NASDAQ:META) has reportedly struck a preliminary deal with Tencent Holdings to introduce a new, low-cost virtual reality (VR) headset in China. Under the agreement, Tencent will be the exclusive seller of the headset in China, with sales expected to begin in late 2024. This collaboration provides Meta with an opportunity to re-enter the Chinese market, where Facebook and Instagram are blocked, and compete with Bytedance, the owner of TikTok, which produces the VR headset, Pico.

The report did not specify the potential price of the new headset, and both Meta and Tencent have not responded to Reuters’ requests for comments. In the United States, Meta sells the Quest 2 headset starting at $300, the Quest Pro headset at $1,000, and the recently unveiled Quest 3 starting at $500.

This move comes as Meta aims to use more cost-effective lenses in the Chinese version of the headset, particularly in comparison to the lenses used in the Quest 3. While Meta is expected to have a larger share of device sales, Tencent would receive a greater portion of content and service revenue. The cheaper headset is designed to offer games and other apps published by Tencent.

China remains a strategically important market, and the collaboration allows Meta to navigate the regulatory environment while catering to the demand for VR technology in the country. This development also coincides with the broader competition in the VR space, as Meta faces a potential threat from Apple’s upcoming mixed-reality headset Vision Pro, set to be available early next year. The Vision Pro is priced higher than Meta’s most expensive Quest headset and targets enthusiasts in the nascent VR market, where Meta’s Quest currently leads in sales, according to research firm IDC.

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